What Does “Power of Attorney” Mean?

A power of attorney is a legal document giving one person—the “agent”—the legal power to make legal, financial, or medical decisions for another person. According to a recent article from Nerd Wallet, “What is a Power of Attorney (POA)? Types, How, When to Use,” the POA lets someone act on your behalf if you are traveling, too sick to act on your own behalf or can’t be present to sign legal documents.

You may name any adult, including your spouse, adult child, sibling, or a trusted friend, to act as your agent under power of attorney. It can be granted to anyone who is a legal adult and of sound mind. Ordinary power of attorney designations dissolve if you become incapacitated. However, durable power of attorney designations remain intact, even upon incapacity.

You can give one person power of attorney or divide the responsibilities among multiple people.

Most people don’t know that power of authority authorizations can be very specific or general, depending on your needs. When having an experienced estate planning attorney draft a power of attorney, review the desired scope of your agent’s authority, when it should take effect and the desired duration.

If you don’t have a power of attorney and become incapacitated, a court can appoint someone to act on your behalf. However, court intervention turns a private matter into a public proceeding, and you cannot know if the appointed conservator will follow your wishes.

There are several types of power of attorney. The durable power of attorney remains intact, even when you are incapacitated. The ordinary power of attorney becomes moot once you are incapacitated. A dual power of attorney gives power to two people and requires both individuals to sign off on any decisions.

A dual power of attorney may be useful if you have two children, for instance, and you’d like them to make joint decisions for you. Regardless of how many powers of attorney you appoint, you should always name successor agents for each power of attorney, in case the primary person is unable or unwilling to serve when needed.

A medical power of attorney, also called a health care proxy, is a type of advance directive giving another person to make all health care decisions for you in accordance with your wishes when you are unable to do so. Health care proxy decisions generally cover any type of medical treatment or procedure to diagnose and treat your health. Make sure the person you grant medical power of attorney to is familiar with your wishes and knows what decisions you would want in treatment or for life—supporting measures.

Reference: Nerd Wallet (May 10, 2023) “What is a Power of Attorney (POA)? Types, How, When to Use”

What are Biggest Blunders with Health Care Proxies?

A health care proxy, also called a medical power of attorney, is a legal document in which you name a person to make medical decisions, in the event that you are unable to do so for yourself.

Forbes’ recent article entitled, “Health Care Proxies – 5 Biggest Mistakes,” lists the five biggest mistakes people make on this vital document.

No 1: Failing to have one. A study found that two-thirds of us don’t have a health care proxy. If you don’t have one, your doctor may be forced to make decisions in a vacuum. As a result, your wishes may not be respected. Even worse, a court might have to step in to make decisions requiring a guardian’s appointment.

No. 2: Not speaking to those you appoint as your health care agent. This conversation doesn’t have to be complicated or lengthy. However, it’s essential to give your agent some understanding of your feelings and wishes.

No. 3: Not addressing religion If you’ve changed faith , married someone of a different faith, or have children with differing religious views, addressing this in your health care documents and your discussions with your agent is critical. Don’t skip religious considerations because you aren’t religious—that’s also an essential part of this.

No. 4: Not having copies of the health care proxy available. You can put together an envelope and write your name, address, phone number and those of your agents on it. Place a copy of your health insurance info, drug cards and health care proxy in the envelope. If you created and signed a living will and/or a POLST (Physical Order for Life-Sustaining Treatment) that you signed with your doctor, add copies of those to the envelope and a HIPAA release.

No. 5: Failing to address financial matters. Your health care agent most likely won’t have legal rights to pay medical bills, caregiver costs, or other outstanding bills. You should sign a durable power of attorney, a financial document designating a person (called an agent) to handle financial matters for you. Provide your agent with the necessary information, like bank account information.

Reference: Forbes (March 21, 2023) “Health Care Proxies – 5 Biggest Mistakes”

Should I Try Do-It-Yourself Estate Planning?

US News & World Report’s recent article entitled “6 Common Myths About Estate Planning explains that the coronavirus pandemic has made many people face decisions about estate planning. Many will use a do-it-yourself solution. Internet DIY websites make it easy to download forms. However, there are mistakes people make when they try do-it-yourself estate planning.

Here are some issues with do-it-yourself that estate planning attorneys regularly see:

You need to know what to ask. If you’re trying to complete a specific form, you may be able to do it on your own. However, the challenge is sometimes not knowing what to ask. If you want a more comprehensive end-of-life plan and aren’t sure about what you need in addition to a will, work with an experienced estate planning attorney. If you want to cover everything, and are not sure what everything is, that’s why you see them.

More complex issues require professional help. Take a more holistic look at your estate plan and look at estate planning, tax planning and financial planning together, since they’re all interrelated. If you only look at one of these areas at a time, you may create complications in another. This could unintentionally increase your expenses or taxes. Your situation might also include special issues or circumstances. A do-it-yourself website might not be able to tell you how to account for your specific situation in the best possible way. It will just give you a blanket list, and it will all be cookie cutter. You won’t have the individual attention to your goals and priorities you get by sitting down and talking to an experienced estate planning attorney.

Estate laws vary from state to state. Every state may have different rules for estate planning, such as for powers of attorney or a health care proxy. There are also 17 states and the District of Columbia that tax your estate, inheritance, or both. These tax laws can impact your estate planning. Eleven states and DC only have an estate tax (CT, HI, IL, ME, MA, MN, NY, OR, RI, VT and WA). Iowa, Kentucky, Nebraska, New Jersey and Pennsylvania have only an inheritance tax. Maryland has both an inheritance tax and an estate tax.

Setting up health care directives and making end-of-life decisions can be very involved. It’s too important to try to do it yourself. If you make a mistake, it could impact the ability of your family to take care of financial expenses or manage health care issues. Don’t do it yourself.

Reference: US News & World Report (July 5, 2021) “6 Common Myths About Estate Planning”

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What Does “Power of Attorney” Mean?

What are Biggest Blunders with Health Care Proxies?

Should I Try Do-It-Yourself Estate Planning?

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